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1 – @bespokeinvest: The semis are now in their 4th 10%+ correction since early June. That’s the most corrections inside a window that small since late 2002. $SOXX $SMH

2 – @KevRGordon: With this morning’s CPI report, we now know that inflation-adjusted average weekly earnings fell by 0.1% y/y in September. It was worse for inflation-adjusted average hourly earnings, which fell by 0.7% y/y (the sixth consecutive decline).

3 – @LizAnnSonders: Retirees will get a raise in 2027 … social security benefits are set to increase by 3.6%, marking the largest cost of living adjustment since 2023

4 – @Optuma: Yesterday saw the 20th ATH for $AAPL this year, and the 1st for $MSFT. Green lines on this $XLK chart show when they make a new ATH on the same day:

5 – @DeItaone: AI COSTS PLUNGE 13-FOLD ANNUALLY AS INVESTMENT NEARS $1 TRILLION AI costs have fallen 47% per quarter since 2023, equivalent to a 13-fold annual decline, according to Epoch AI. That’s 6 times faster than computing costs and 18 times faster than lithium battery costs. Meanwhile, U.S. and Chinese tech firms are projected to spend nearly $1 trillion on AI infrastructure this year, raising a critical question: Can AI generate enough returns to justify the spending?

6 – @Brad_Setser: The combined trade surplus of China, Korea and Taiwan in September was a staggering $200 billion ($2.4 trilllion)

7 – @schaeffers: AI is supposed to unlock a massive productivity boom. So far, the data isn’t there. U.S. productivity growth sits at 2.3%, well below the 3.9% pace seen in 1999. If AI can push this materially higher, today’s massive investment could pay off.

8 – @MikeZaccardi: GS: A long history of the US 10yr Treasury rate

9 – @neilsethinew: Bank of America raised its core PCE tracking estimate a full tenth of a percentage point to 0.32% from 0.22% month over month, or 3.1% from a year earlier. That “would mark a notable acceleration from the 3-month trailing average of 0.19% m/m,” BofA said, adding that its estimate “is subject to change after tomorrow’s PPI data, and Friday’s import price data,” and that it sees “more uncertainty around this estimate than normal given the recent methodology changes to legal services, computer software and accessories and portfolio management and investment advice.”

10 – @PeterBerezinBCA: According to Ramp AI, while token volumes continue to rise, spending on tokens is stagnating because token prices keep falling.

The Russell 2000 ($RUT) has declined more than 11% from its all-time high and appears poised to close in correction territory.

The Russell 2000 has experienced 18 previous corrections of at least 10% from an all-time high. Six of those corrections bottomed within 10 trading days of entering correction territory, while seven required more than 100 trading days to establish a definitive bottom.

Our preference for large-cap equities remains unchanged. In our 2026 outlook published in December 2025, we explicitly favored large caps over small caps. Although small caps initially outperformed the S&P 500 earlier this year, that relative strength has since reversed. Below is a slide from the outlook.

The macroeconomic backdrop reinforces our conviction. With the Federal Reserve maintaining a restrictive policy stance and the prospect of additional tightening, smaller companies remain particularly vulnerable to elevated financing costs and tighter credit conditions. Meanwhile, structural investment in artificial intelligence continues to provide a compelling earnings catalyst for select large-cap companies.

While a tactical rebound in small caps is certainly possible, we see little reason to abandon our strategic preference for large-cap equities. We expect large-cap outperformance to persist as tighter financial conditions continue to weigh disproportionately on smaller companies.

The S&P 500 is trading approximately 0.6% lower following September’s inflation report, which reignited concerns over additional Federal Reserve tightening.

While headline CPI rose 0.6% month-over-month, in line with expectations, core inflation exceeded forecasts at 0.3%. However, the composition of the report warrants closer examination.

Gasoline alone contributed approximately 0.35 percentage points, accounting for nearly 60% of the headline increase. This suggests that much of the inflationary impulse remains energy-driven, an area where monetary policy has limited direct influence. Nevertheless, persistent shelter and core price pressures deserve attention.

Technical Outlook: The Bullish Structure Remains Intact

Despite today’s weakness, we believe the S&P 500 remains in a constructive technical uptrend.

The index continues to trade above its rising 20-day moving average, which represents our first immediate support. A decisive breakdown would shift our attention toward the ascending trendline connecting September’s lows.

Our more consequential threshold remains the 7,500–7,516 support zone (which we spoke about in the last week’s MI Clip), reinforced by historical price action and significant volume concentration. As we previously emphasized, a sustained breach of this region would warrant reassessing our bullish thesis.

Our October Outlook Remains Unchanged

For now, we see insufficient technical evidence to anticipate a significant correction. Our base case continues to favor a positive October close, although near-term volatility cannot be ruled out.

As discussed in last week’s Market Insight Clip, historical seasonality during midterm election years suggests that the latter part of October could experience some consolidation, particularly under Republican administrations. We thought it would take another week to materialize, but it might’ve been triggered soon due to hotter than expected CPI (this is the first hotter than forecast CPI read in the last 10 CPI prints)

We therefore remain constructive on the broader market trajectory while acknowledging the potential for intermittent weakness. Unless key support levels deteriorate, we would interpret the current pullback as consolidation within an established uptrend rather than the beginning of a sustained bearish reversal.

U.S. CPI rose 0.6% month-over-month in September, but the underlying composition tells a different story.

Gasoline prices surged 9.1%, contributing 0.35 percentage points, nearly 60% of the headline increase. Meanwhile, food prices were unchanged, grocery prices declined 0.1%, and medical care commodities fell 0.7%. Core CPI increased a more moderate 0.3%.

Much of this inflationary pressure is energy-driven, reflecting geopolitical disruptions surrounding the conflict in Iran rather than a broad based acceleration in consumer prices.

The Fed has limited influence over global energy supply. Further rate hikes could intensify pressure on already-strained consumers while doing little to alleviate gasoline inflation.

If tensions in Iran ease and energy prices normalize (of course, a big if), we believe this inflationary spike could cool down soon. However, a prolonged energy shock risks spilling over into broader inflation categories, warranting continued vigilance.